The San Francisco-based start-up, formed late last year with the backing of technology giants IBM, Intel and AT&T, has announced show-stopping plans to build a network of 20,000 hot spots, with 15,000 up and running by 2005. Hot spots are areas where wireless Internet access is available to the public.

Seven months after its launch, however, Cometa remains far behind competitors in the race to snap up the most valuable hot-spot locations and appears unlikely to meet its ambitious timetable, analysts said.

"I don't think they'll have the numbers they projected," said Pyramid Research analyst John Yurke, who recently wrote a research paper predicting Cometa will have only 10,000 hot spots in place by its announced deadline. "Wiring up a McDonald's is one thing. But to do all the rooms in a hotel or cover an airport can take weeks."

A Cometa representative said the company remains on schedule to meet its goals and downplayed suggestions that it is facing unexpected difficulties. "We're on track," said Cometa spokesman John Balbach, although he declined to elaborate.

Cometa has been in the spotlight because of its high-profile backers as well as the scale of its ambitions, which dwarf those of rival networks by aiming to make wireless broadband access nearly ubiquitous in the 50 largest U.S. cities.

But analysts point to a number of recent setbacks that signal the honeymoon is over for the start-up, which launched amid expectations that it would dominate the booming market for wireless broadband services.

Earlier this month, Cometa rival Wayport won a seat at a high-profile hot-spot trial with Cometa's only announced customer to date, fast-food giant McDonald's. Meanwhile, in a blow to Cometa's hopes of signing up telecommunications carriers, Verizon Communications and SBC Communications have both recently announced plans to create hot-spot services of their own, undercutting the chances of future partnerships.

Because size is one of the key measurements that carriers and service providers will look for in a partner, Cometa's plan all but requires it to be first in building the country's largest hot-spot network. But that task is looking more daunting now than it did when the company first launched, as companies have since rushed to enter the commercial hot-spot business.

To meet its 15,000 hot-spot goal, Cometa will have to build 500 hot spots a month for the next two-and-a-half years. That pace would quickly create the biggest hot-spot network in the United States. The biggest provider for now, T-Mobile, has just 2,400 active hot spots, and most network providers are building out new sites at a rate of tens per month, rather than hundreds.

But working on a less grand scale can have its advantages, analysts said, particularly in the race to secure high-quality hot-spot locations such as airports, hotels and other travel hubs that are most likely to attract large numbers of potential customers.

Lofty ambitions?
Cometa is under the gun because the company isn't thinking small and is looking to do it all itself, while competitors are moving fast and partnering with others to provide the right mix of services and products, IDC analyst Keith Waryas said.

"Cometa is in a tough spot because they're trying to get big, which makes it difficult for them to react quickly," he said. "But if they don't, they're of no use to carriers."

Cometa's Balbach countered that the company's efforts to create a true national network will result in significant advantages in price and quality of service over competitors, once it is built.

One of the biggest issues facing hot-spot companies is the lack of unified coverage, which might force a business traveler to hop between several different providers over the course of a single trip. This is a problem because customers must typically change computer settings and make different billing arrangements each time they sign on to a new system.

Some networks are striking so-called roaming agreements that allow customers from multiple services to use their equipment and thus quickly expand their service footprints. But Cometa said such arrangements are clunky and face enormous administration problems as the number of networks cobbled together increases. By contrast, the kind of single national network that Cometa plans to build avoids these problems and ultimately stands to reap benefits of scale.

Some analysts said the situation for now favors less ambitious hot-spot providers that have come out of the gate more quickly. Cometa competitor Wayport, for example, already has 650 hot-spot locations that it rents to service providers such as Boingo Wireless. By comparison, Cometa has announced just one customer, McDonald's, which has so far installed just 10 Cometa hot spots at restaurants in New York.

A Wayport representative downplayed the importance of sheer size and emphasized instead the need to get to the market first.

"It's not all about having the largest network; it's about having the best locations with the highest amount of traffic," said Dan Lowden, Wayport's vice president of marketing.

Wireless technology known as Wi-Fi has taken off as a cheap and effective way to share resources on a network, such as a broadband connection, and it has quickly spawned a commercial hot-spot service industry aimed at delivering bandwidth in high-use areas including hotels, airports and truck stops. Anticipating demand, providers are expected to add more than 55,000 new hot spots in the next five years on top of 4,200 locations in the United States at the end of 2002, according to IDC.

But the prospects for the service side of the business are not clear. The major criticism of the service business is that no one has been able to demonstrate a sustainable model. Part of that resides in the fact that the market is still young, but the other part is that it requires many new components and payment models, which are still evolving.

Hot-spot pioneer Joltage, for one, has already folded, saying that it appeared it would take longer than expected to acquire enough customers on its networks for the company to sustain itself.

Hooked on hot spots
Doubts about the viability of the hot-spot market haven't stopped numerous companies from trying to break in. Wireless service provider T-Mobile was among the first to jump into the market in a partnership with coffee chain Starbucks. The second-largest service provider is Boingo Wireless, which offers about 1,300 hot spots including 650 through its roaming agreement with Wayport. Other top providers include iPass, with about 1,000 hot spots that it rents from backend providers.

Some large telephone carriers are looking to build their own hot spots. Verizon has activated 150 free wireless broadband hubs in Manhattan as a sweetener for its digital subscriber line customers and plans to increase that number to 1,000. SBC also has said it will begin offering hot spots to its broadband subscribers under a similar arrangement.

Those announcements are seen as a blow to Cometa because Verizon and SBC represent the kind of big customers that the company is eventually hoping to sign on. Once they build their own networks, they may be less likely to seek out partnerships.

Meanwhile, Cometa is competing head-to-head with rivals in early trials with customers such as McDonald's.

Earlier this year, McDonald's

A McDonald's representative said that the company plans to expand its Cometa trial within the next few weeks in New York and New Jersey, but declined to say how many restaurants would be involved.

"At the end of the year we will look at the data and customer feedback and decide where we go from here," the representative said. "We might go with just one provider, or we may use several. It's very much an experiment."

In a sign of how little time Cometa can afford to lose, the company on Wednesday confirmed that it is temporarily outsourcing key network management services to software start-up AuthDirect as it awaits a similar application from investor IBM.

Analysts said Cometa's reliance, even temporarily, on a third-party provider such as AuthDirect underscores the challenges of building a massive network at top speed.

"To reinvent the wheel takes a lot of time and money, especially for research and development in a young market like this," IDC's Waryas said.